FTC OK’s Google’s AdMob Purchase

May 22, 2010

After rumors that Google was headed for a major court battle with government officials over a $750 million deal to buy out mobile advertising rival AdMob, US antitrust regulators finally gave Google the go ahead to buy the company after months of delays.

The Federal Trade Commission (FTC) said it unanimously decided to approve the deal mainly because of Apple Inc’s recent push into the $600 million mobile advertising market in the US. The ruling brings the six-month antitrust investigation to a close.

The emergence of another wealthy competitor eased the FTC’s concerns that Google would be able to use AdMob to extend its dominance into the blossoming field of wireless devices.

Apple’s role in persuading the government to sign off on the deal was a strange twist because the maker of the iPhone and iPad was negotiating to buy AdMob before Google put a higher bid on the table last November.

Shortly after the AdMob snub, Apple purchased a smaller mobile ad service, Quattro Wireless, that is providing technology for the iAd platform.

Now that it has approval from the FTC, Google plans to take over AdMob within the next few weeks.

AdMob founder and Chief Executive Omar Hamoui said he was pleased with the decision and would work with Google to finalize the deal.

Although approving the Google/AdMob deal, the FTC said it will “continue to monitor the mobile marketplace to ensure a competitive environment and to protect the interests of consumers.”

In the lead up to Friday’s decision to allow the merger, there had been signs that the FTC wanted to challenge the acquisition.

FTC staff had possibly believed that app developers might end up with fewer choices of firms to sell their advertising space. But few app developers seemed to share the FTC’s concerns.

One developer told Reuters in April that the FTC staff appeared “dead set against” approving the deal, and went on to say that he was puzzled by the FTC’s concerns.

Antitrust lawyer with Constantine Cannon, Jeff Shinder, said this sort of commentary and others like it describing similar interactions with the commission made the FTC’s job even harder as it faced the prospect of explaining its case to a judge.

“Someone’s got to get hurt here. You want to show consumers coming in, saying ‘I’m worried,’” Shinder told Reuters. “And (it hurts) when one of these constituencies is openly disdainful of the agency’s action.”

Google has faced growing antitrust scrutiny as it seeks to use revenue from its dominance of the search market to move powerfully into other markets.

The company walked away from a search deal with Yahoo Inc in 2008 when the Justice Department said it would challenge the merger. And Google Chief Executive Eric Schmidt was forced to step down from Apple’s board last year after his dual roles came under FTC review.